Chief Minister Siddaramaiah. File

Karnataka appears to be entering a fresh round of tussle with the Centre as the Congress-ruled State on July 23 declared that it will boycott the NITI Ayog meeting convened by Prime Minister Narendra Modi in Delhi on July 27, accusing the Centre of ignoring its demands in the Union Budget.

“We have decided to boycott the NITI Aayog meeting, which will be chaired by Prime Minister Narendra Modi on 27 July, as a mark of protest,” announced Chief Minister Siddaramaiah in his post on social media platform X hours after the Union Budget was presented by Finance Minister Nirmala Sitharaman.

“Despite my earnest efforts in calling for an all-party meeting of MPs in New Delhi to discuss Karnataka’s essential needs, the Union Budget has neglected our State’s demands. Finance Minister Sitharaman, who also attended the meeting, has ignored the concerns of the people of Karnataka. We don’t feel Kannadigas are heard, and hence there is no point in attending the NITI Aayog meeting,” the Chief Minister said, who earlier listed out the demands of Karnataka “ignored” by the Union Budget at an earlier press meet.

Launching a direct attack on Prime Minister Narendra Modi, he said, “Mr. Modi is unable to see States other than Andhra Pradesh and Bihar because his eyes are set on retaining his post.”

He further said even the demand to approve Mekedatu and Mahadayi projects had been ignored, while funds for metro rail and other infrastructure projects are “still a distant dream.”

It may be noted that the Congress government in Karnataka had launched an offensive against the Centre before the Lok Sabha polls by taking up “My tax, my right” campaign against the alleged injustice meted out to it in the devolution of State’s share of central taxes and development grants. The ruling Congress legislators had staged a protest against the Centre in Delhi then. The State has also launched a legal fight against the Centre by approaching the Supreme Court against the delay in the disbursal of drought relief.

S. Gajraj, chairman, Marketing Committee, Tamilnadu Small and Tiny Industries Association, and his family.

Annual Income: ₹25 lakh

Number of members in the family: 3

The Budget is pro-poor and pro-women, who are the most vulnerable. It rightly addresses their concerns, and has allocated money for their uplift. But the tax rebate could have been much higher for persons belonging to the lower income group. The increase in the standard deduction is a welcome move, but the slabs can be changed further for the lower income group. The Budget has left the common man with mixed feelings. On the one hand, the standard deduction has been increased for the salaried class, but on the other, long-term capital gains tax has been increased from 10% to 12.5% and short-term capital gains tax has been increased from 15% to 20%, which is unacceptable.

The middle class expected some relaxation on tax incidence that has not been addressed in this Budget. The industry sector was concerned that we may miss fiscal targets. By sticking to less than 5% (fiscal deficit target), the government has given an assurance that it will not announce populist measures, which is good. Higher capital expenditure spending is a positive feature of the Budget. Importantly, inflation needs to be controlled. With a reduced mandate for the BJP in the 2024 election, I did not have big expectations on bold reforms. In my opinion, the Budget was not bold.

S. Selladurai, a retired professor of Anna University, and his wife Geetha.
| Photo Credit: Akhila Easwaran

Annual income: ₹17 lakh

No. of family members: 3

The Union Budget has minor benefits for the salaried class and retired people, said S. Selladurai, a retired professor of Anna University. The increase in the standard deduction limit from ₹50,000 to ₹75,000 is welcome, he said.

“I appreciate the initiative of giving importance to skill development in the Budget. The government has been focusing every year on developing skillsets, but what happens to those who have developed skills? Are they getting jobs? Employers say students are not skilled, but even if we give them sufficient training, there will be a benefit only if there are sufficient jobs. There is no mention of improving job opportunities,” he said.  

The Budget has offered to waive the interest on higher education loans to some extent, which is welcome, he said.

“There is no mention of any relief for senior citizens. We expected an exemption from interest on our investments post retirement. An increase in the limit of exemption would have benefited us,” he said.

The prices of groceries, especially lentils, have been soaring. The prices will fall only if the cost of petrol and diesel is brought down. There are small benefits in the changes to the slabs. I may save approximately ₹17,000 annually. 

D. Kumar, a fruit vendor.
| Photo Credit: M. Vedhan

Annual income: ₹1.2 lakh per annum

No. of family members: 4

D. Kumar and Santhi, a couple, find little solace in the Union Budget being presented every year, and this year is no different. 

While Mr. Kumar runs a fruit shop in Parry’s, his wife works as a domestic help. With limited funds, they find it difficult to educate their two girl children. Adding to their burden are the high rent and electricity charges.

Mr. Kumar said that daily earnings are being used to run the family, and his wife’s salary is spent exclusively on their children’s education. After the COVID-19 lockdowns, the banks disbursed loans of ₹10,000, which helped in purchasing stock, but the initiative has since been stopped, he points out. He wants the Central government to provide loans to vendors like him. Except certain social welfare benefits provided by the State government in the form of free bus travel for women and the monthly aid of ₹1,000, which his wife benefits from, the Central government has no such measures for the economically weaker sections of society, he said.

Mr. Kumar said that the Centre should also announce social welfare benefits for those with a family income of less than ₹2 lakh per annum. 

The story so far: The 2024 Union Budget, presented by Finance Minister Nirmala Sitharaman on Tuesday, includes developing a taxonomy for climate finance to enhance the availability of capital for climate adaptation and mitigation.

“This will support achievement of the country’s climate commitments and green transition,” Ms. Sitharaman said in her speech.

What is taxonomy for climate finance?

Climate finance taxonomy refers to a set of standardised regulations and guidelines to inform companies and investors on making impactful investments towards environmental conservation and combating the climate crisis.

The term taxonomy originally comes from the field of biology. It is the scientific method of naming and classifying organisms, including plants, animals, and microorganisms.

According to the International Finance Corporation (IFC), a member of the World Bank Group, “diverse interpretations fragment markets and confuse investors. What seems ‘green’ in one country may appear ‘brown’ elsewhere, stalling environmental progress,”

Taxonomies for sustainable climate financing, in general, include a detailed list of economic sectors and activities and corresponding criteria that determine if it aligns with larger climate goals.

“There are two dimensions to a taxonomy: the system itself in all its complexity, and the final product (boiled down to its pragmatic essentials) as it will be used by financial market participants and other users. Users of taxonomies and definitions are not necessarily interested in understanding why a given metric or threshold must be used for an activity. Rather, they will use the taxonomies and definitions as a final product and screen activities to determine eligibility under the taxonomy,” according to the Organisation for Economic Cooperation and Development (OECD).

Also read: Boost financing for green projects

Climate finance taxonomies are known as ‘green’ taxonomies.

Why is climate finance taxonomy important?

Climate financing forms a core area of combating the climate crisis. According to the U.N. Framework Convention on Climate Change’s (UNFCCC’s) first ‘Needs Determination Report’, financing of around $5.8-5.9 trillion is required to implement developing countries’ climate action plans by 2030, and this does not fully include adaptation costs.

Climate finance taxonomies can facilitate financing for investors, credit institutions etc. based on how climate-aligned an entity or an activity is. It can therefore direct financial resources towards projects that support climate change mitigation and adaptation.

Green taxonomies help investors compare investment opportunities and measure their environmental impact.  A localised climate finance taxonomy can also help align a country’s climate goals with the Paris Agreement and other international climate commitments while accounting for regional factors that influence localised transition pathways.

For example, different regions will have to adopt different pathways to reach the goal of limiting global warming to under 1.5 degrees C, as required under the Paris Agreement. A one-size-fits-all approach won’t work here, and where localised taxonomies on climate finance can help. Science-based targets at the regional level can help define metrics, based on which experts can develop standards and investors can determine their financial commitments, all without compromising on global climate goals.

Climate finance taxonomies can also help prevent greenwashing by companies by setting common standards based on scientific assessments.

“The development of a taxonomy for climate finance is crucial for establishing clear standards. It ensures that investments are transparently and efficiently directed towards genuine green projects, driving innovation and supporting India’s ambitious climate goals,” Harjeet Singh, Global Engagement Director for the Fossil Fuel Non-Proliferation Treaty Initiative, told The Hindu.

Many countries like China, Malaysia, and Sri Lanka have already issued green taxonomies to facilitate climate-sensitive investments.

Editorial | Towards a green growth: On the RBI and a green taxonomy

What has India done to set up a green taxonomy?

In January 2021, India established a task force on sustainable finance under the Department of Economic Affairs, Ministry of Finance, to create a framework for sustainable finance in India, establish the pillars for a sustainable finance roadmap, suggest draft taxonomy of sustainable activities, and create a framework of risk assessment by the financial sector.

In April that year, the Reserve Bank of India (RBI) joined the Central Banks and Supervisors Network for Greening the Financial System (NGFS) as a member. RBI is also a member of a task force on climate-related financial risks set up by the Basel Committee on Banking Supervision, and the International Platform on Sustainable Finance.

Why does India need a green taxonomy?

According to the IFC, India needs an estimated $10.1 trillion to achieve net-zero by 2070. Public investments alone can’t match this goal, which calls for standardisation in investments.

“A green taxonomy framework could significantly help India attract both domestic and international investments, aligning these funds with its national and global commitments to a green transition and enhanced climate resilience,” Mr. Singh said.

“Investors and industry have been demanding a taxonomy and transition pathway as guidance for flow of finance and reorientation of economic activity. The Budget announcements that clearly mention the establishment of a carbon market, taxonomy and transition pathways mark significant progress in planning towards net zero in 2070,” Suranjali Tandon, an associate professor at the National Institute of Public Finance and Policy, said.

Union Budget 2024: FM announces duty cut on mobile phones, PCBA and chargers.
| Photo Credit: Haider Ali Khan

Union Finance Minister Nirmala Sitharaman, in her Budget speech on July 23, announced a cut on basic custom duty (BCD) to 15% on mobile phones, mobile printed circuit board assembly (PCBA) and mobile chargers. Currently, the BCD on them is 20%.

Click here for the Union Budget 2024 updates, highlights

It is being speculated that this 5% window might impact the end pricing of smartphones in near future.

While presenting the Union Budget of 2024-25, the Finance Minister said, “With a three-fold increase in domestic production and almost a 100-fold jump in exports of mobile phones in the last six years, the Indian mobile industry has matured. In the interest of consumers, I now propose to reduce the basic customs duty [BCD] on mobile phone, mobile PCBA, and mobile chargers to 15%.”

Pankaj Mohindroo, chairman of India Cellular and Electronics Association (ICEA), an industry body of mobile and electronics industry, said, “We are impressed with its intent and direction focusing on enhancing manufacturing and export competitiveness. Hon’ble Finance Minister has also acknowledged the tremendous growth of mobile phone manufacturing and exports.”

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He added that ICEA recommended to reduce BCD on mobile phones, its PCBA and charger to 15%, which has been accepted.

The mobile and electronics industry is elated with the announcements and will go a long way to enhance manufacturing, exports and our competitiveness, said Mr. Mohindroo.

“The move to reduce the basic customs duty on mobile phones, PCBAs, and mobile chargers to 15% is a progressive step that highlights the maturity and growth potential of the Indian mobile industry. This reduction will not only benefit consumers but also bolster our domestic manufacturing capabilities, allowing India to compete more effectively on the global stage,” said Anand Dubey, CEO, Indkal Technologies.

The proposed exemptions on key components like oxygen-free copper and parts for connectors are also commendable steps that will further strengthen our electronics manufacturing ecosystem, added Mr. Dubey.

“The proposal to reduce the basic customs duty on mobile phones, mobile PCBA, and mobile chargers to 15% is a positive step,” said A. Gururaj, MD of Optiemus Electronics.

“We welcome the Budget 2024 announcement to reduce BCD on mobile phones, PCBA and chargers, while simultaneously extending exemptions on raw materials for smartphone manufacturing, capital goods, and inputs for capital goods in the electronics industry,” said Muralikrishnan B, President, Xiaomi India.

“At Xiaomi India, we have been manufacturing nearly 100% of our smartphones locally with a strong emphasis on sourcing components like PCBA, charging cables, camera modules, and mechanics, among others. Today’s announcement will help further strengthen the domestic electronics manufacturing ecosystem.”

With these progressive steps, we anticipate a surge in consumer spending, including increased demand for smartphones, added Muralikrishnan.

Villagers show lithium stones in Reasi district of Jammu (file photo)
| Photo Credit: PTI

Finance Minister Nirmala Sitharaman on July 23 announced to fully exempt 25 critical minerals from custom duties, and reduce basic custom duties (BCD) on two of them. “This will provide a major fillip to the processing and refining of such minerals and help secure their availability for these strategic and important sectors,” Ms. Sitharaman said.

Click here for the Union Budget 2024 updates, highlights

Ms. Sitharaman presented her seventh straight Budget on Tuesday for the third term of the Modi government.

These critical minerals include antimony, beryllium, bismuth, cobalt, copper, gallium, germanium, hafnium, indium, lithium, molybdenum, niobium, nickel, potash, rare earth elements, rhenium, strontium, tantalum, tellurium, tin, tungsten, vanadium, zirconium, selenium, cadmium, and silicon (other than quartz and silicon dioxide). The custom duty on these minerals was previously in the range of 2.5% and 10%.

For silicon quartz and silicon dioxide, BCD has been reduced from 5-7.5% to 2.5%.

For graphite, BCD has been reduced from 5-7.5% range to 2.5%. On July 22, Coal India Limited announced it secured a graphite block, a critical mineral, in Madhya Pradesh — the company’s first-ever non-coal mineral mining venture.

Also Read: Budget 2024: Mobile phones, gold and silver jewellery to get cheaper

India currently recognises 30 critical minerals.

The government will set up a Critical Mineral mission for domestic production, recycling of critical minerals, and overseas acquisition of critical mineral assets, Ms. Sitharaman announced. This will include technology development, skilled workforce, extended producer responsibility framework, and a suitable financing mechanism.

Image used for representation purpose only.
| Photo Credit: Reuters

Finance Minister Nirmala Sitharaman, in her Budget speech on July 23, said the fiscal deficit for 2024-25 is estimated at 4.9% of GDP.

Presenting the Union Budget for 2024-25, she said the government aims to reach a 4.5% fiscal deficit in 2025-26.

Click here for the Union Budget 2024 updates, highlights

The Finance Minister said gross and net market borrowing is pegged at ₹14.01 lakh crore and ₹11.63 lakh crore, respectively, in FY25.

Net tax receipts are estimated at ₹25.83 lakh crore in FY25 while the total receipts are pegged at ₹32.07 lakh crore.

Total expenditure is estimated at ₹48.21 lakh crore in FY25, she added.

It may be recalled that the interim Budget, presented in February 2024, had pegged fiscal deficit, which is the difference between the government expenditure and income, at 5.1% for FY25 against 5.8% in the last fiscal year.

In her speech, Ms. Sitharaman also said the government plans to launch ‘NPS Vatshalya’ to provide pension contributions by parents and guardians.

Finance Minister Nirmala Sitharaman has changed the income tax slabs for the new tax regime which is likely to benefit taxpayers.

Finance Minister Nirmala Sitharaman in her seventh Budget speech on July 23 revised the tax slabs under the new regime. She told the House that as a result of these changes, a salaried employee would be able to save up to ₹17,500 in income taxes.

Click here for the Union Budget 2024 updates, highlights

Whilst the rate of taxation remains unchanged, the size of each of the slabs, excluding the initial zero to ₹3 lakh, remains unchanged. The erstwhile slab of ₹3 lakh to ₹6 lakh would now be expanded to ₹3 lakh to ₹7 lakh. However, the rate of taxation, that is 5%, remains unchanged. Similarly, the other slabs, that is, ₹6 to 9 lakhs, ₹9 to 12 lakhs, ₹12-15 lakhs and thereby beyond, would be revised to ₹7-10 lakhs, ₹10-12 lakhs, ₹12-15 lakhs and thereby beyond.  

Budget 2024-25: Taxes

Earlier, the Finance Minister further placed increasing the standard deduction for salaried employees from current ₹50,000 to ₹75,000 under the new tax regime.

Ms. Sitharaman further announced deduction in family pension for pensioners to be enhanced from ₹15,000 at present to ₹25,000. She held the measure would provide relief to about 4 crore salaried and pensioner individuals.

Concluding her speech, the Finance Minister told the House that because of the taxation measures announced today, ₹37,000 crore would be foregone, which entails ₹29,000 in direct taxes and ₹8,000 in indirect taxes. However, with a realisation of ₹30,000 crore expected, the total foregone amount would stand at ₹7,000 crore.

The government will develop a taxonomy for climate finance, Union Finance Minister Nirmala Sitharaman said in her Budget speech, in New Delhi on July 23, 2024. File (representational image)
| Photo Credit: AP

The government will develop a taxonomy for climate finance to help improve the availability of funds for adapting to climate change and reduce greenhouse gas emissions, Union Finance Minister Nirmala Sitharaman said during her Union Budget 2024-25 presentation in the Parliament on July 23.

Click here for the Union Budget 2024 updates, highlights

This will support achievement of the country’s climate commitments and green transition, she said while presenting the Budget for 2024-25 in the Lok Sabha.

She also said that the government will prepare a roadmap for moving hard-to-abate sectors, such as shipping, aviation, iron and steel and chemicals, from energy efficiency targets to emissions targets.